The UK government intends to organize direct support for local semiconductor companies at taxpayer expense. According to Bloomberg, this is part of a strategy for an industrial sector that has become more strategic amid geopolitical uncertainties.
The project envisages the provision of seed capital for start-ups, support for existing companies, as well as the provision of benefits for private venture investors. UK ministers are expected to set up a dedicated unit over the next three years to coordinate public and private support for the UK semiconductor business in the manufacture of compound semiconductors (e.g. GaN transistor solutions). As Bloomberg notes, compound semiconductors are somewhat different from traditional silicon and are actively being used in advanced solutions including 5G networks and electric vehicles.
The level of support has not yet been agreed with the UK Treasury, but sources expect we are talking about billions of pounds. It is reported that many companies are already being hit by the pandemic and are reconsidering investments in UK projects due to delays in formulating a common strategy.
According to Bloomberg, Britain’s push to build its own semiconductor manufacturing facility is in line with US attempts to limit technology exports to China and slow the development of the eastern country’s semiconductor industry. Under the influence of the United States, the Netherlands and Japan, the two largest manufacturers of semiconductor production equipment, are on the verge of restricting cooperation with Beijing.
As part of the UK strategy, public funding is being channeled through existing schemes and funds including the British Business Bank, Innovate UK and the National Security Strategic Investment Fund. Last week, it was reported that British Prime Minister Rishi Sunak proposed that the country’s semiconductor strategy project for 2022 should include measures to reduce dependency on chips from Taiwan amid looming conflict in the region between the island and mainland China. According to some reports, the draft has since been revised and supplemented, the new version will be released in the coming weeks, although work on the document is ongoing.
The government itself said it would not comment on speculation and “Strategy will be released in due course”. According to some reports, the document now claims that chip supply is the most important economic and geopolitical task. Britain is set to diversify its supply of chips from “friendly and safe nations” while investing billions of pounds in research and development.
This is in line with Sunak’s stated desire to invest in industrial development and support start-ups. In one of his speeches, he cited Silicon Valley’s “entrepreneurial culture” as an example and promised to use the UK’s Brexit leeway to break down regulatory barriers to innovation. Meanwhile, opposition Labor Party officials argue that on the contrary, the country should work with the EU to secure semiconductor supply, as the UK cannot do it alone.